How To Read And Calculate Odds In Sports Betting
Understanding odds in sports betting is the key to figuring out what markets are worth placing stakes on. Sports betting odds come in different formats with each format conveying the same information but in different ways. Betting odds have several uses one of which is in the calculation of implied probability. Betting odds give bettors hints on the final outcome of a sporting event. Understanding odds calculation and application is a major step to becoming a successful bettor. To start with, let’s have a solid knowledge of the types of odds formats available.
What Are The Types Of Betting Odds Format Available?
Betting odds can be displayed in three different formats
- American format
- Decimal format
- Fractional format
Betting odds are offered in these formats for two main purposes;
- They indicate your total earnings from the outcome they represent
- They signal the probability of the outcome they represent
It’s wrong as a bettor to rely on betting odds when trying to measure the probability of an outcome. This is because, asides from the factors related to the event that dictates the odds value, some other hidden factors also affect odds value. Some bookmakers most times manipulate their betting odds to cause traffic on a certain market. You should also know that the sum of the probabilities of a betting market will always be above 100% because bookmakers tend to take their cuts directly from the betting odds. Betting odds also reveal how much the sportsbook charges on outcomes. This is most times referred to as “ juice” or “vig(orish)”.
➔ American Odds
American odds are represented with a three-digit number having either a +/- notation in front. As in,
-150 or +220
You might be wondering what the +/- signs denote. Well, the signs denote two major things; the bettor’s prospective payout and whether it’s a favourite or an underdog bet. The negative three-digit Number depicts a favourite bet and the stake amount needed to earn $100.
A positive three-digit number on the other hand depicts an underdog bet and the amount of profit you will realize if you stake $100. For example;
In a football game between Real Madrid and Osasuna FC. The winning odds of each team can be represented using the American odds format as
Real Madrid Osasuna FC
-130. +110
This shows that Real Madrid is tagged the favourite in this game. However, some point spreads will give both sides the negative sign making it difficult for bettors to decide which is the favourite and which is the underdog. These kinds of games attract more risk.
How do you calculate winnings with American odds?
Following the example highlighted above, you will need to wager $100 on Real Madrid to win $130 and also $100 on Osasuna FC to win $110. If you are not wagering up to $100, here’s a formula you can use to calculate your potential winnings for any stake amount.
If you stake $40 on Real Madrid (-130), your equation will be;
130/100 = 40/x
When you solve for x, you will get 30.77. This means, your total profit will be $30.77 and the total payout will be $70.77.
If you stake the same $40 on Osasuna FC (+110), your equation will look like this;
100/110 = 40/x
X from this equation is 44.00 meaning your profit will be $44.00 and the total payout will be $84.00.
How do you calculate implied probability with American odds?
Implied probability is basically the probability of an outcome occurring as suggested by the odds. Implied probabilities are most time represented in percentages and are derived from the betting odds. Implied probability lets you know when to adjust your bet. If after calculation, your implied probability falls below 50%, it’s advisable not to place a stake in that game. Below is the formula used to calculate implied probability using American odds;
Risk/Return = Implied Probability
Using the example highlighted earlier, we can calculate the implied probability of Real Madrid(-130) winning the game.
{ -(-130) } /{ -(-130)+(100) } = 130/230 or 56.5%
From the calculation above, Real Madrid has a 56.5% chance of winning the game. Betting on Real Mardrid is considered a smart bet in this game.
➔ Decimal Odds
Decimal Odds format is the easiest type of all three odds format to work with. Decimal Odds are displayed like;
Manchester United Chelsea FC
2.40 1.61
How to determine your payout with decimal odds
This is quite straightforward: All you need to do is multiply your bet amount by the odds of the team you support. As for your winnings, subtract your original bet amount from the total payout you get. Let’s take a look:
Supposing you decide to stake $50 on Manchester United, your total payout will be calculated as;
2.40 X $50 = 120
From this calculation, your total payout is $120 so technically, your winnings will be;
$120 – $50 = $70
How to figure out implied probability from decimal odds
You can calculate implied probability with decimal Odds using the formula below;
100/Decimal Odds
For example, if you want to calculate the implied probability of Manchester United Odds, you will have;
100/2.40 = 41.7%
➔ Fractional Odds
The fractional Odds format is popular in the UK and it’s mostly used to represent horse race betting. They are mostly regarded as funny-looking Odds and they are represented as fractions; 9/12, 8/11, and so on. Let’s take 8/11 as an example. The number on the left-hand side (8) depicts the number of times the bookmaker expects the outcome to fail. While the number on the right-hand side depicts how many times the sportsbook expects the outcome to succeed.
How to determine your payout with fractional odds
You can determine your total payout by simply multiplying your wager by the coefficient of the market’s fractional odds and summing up the result with your initial wager. For example, let’s say the fractional odds of a market is 8/13 and you then decide to stake $10 on the market. Your total payout from this stake would be calculated as;
{ (8/13) x $10 } + $10 = $16.15
How do you calculate implied probability with fractional odds?
To calculate the implied probabilities of fractional odds, you divide the total number of times for successful outcomes by the total number of trials. Using the 8/13 fractional odd as an example, the implied probability will be calculated as;
Total number of trials; 8+13 = 21
Implied probability; 13/21 = 0.619 x 100 = 61.9%
